BILL NUMBER: SB 703 AMENDED
BILL TEXT
AMENDED IN ASSEMBLY JULY 12, 2011
AMENDED IN ASSEMBLY JUNE 28, 2011
AMENDED IN SENATE MAY 31, 2011
AMENDED IN SENATE MARCH 30, 2011
AMENDED IN SENATE MARCH 24, 2011
INTRODUCED BY Senator Hernandez
FEBRUARY 18, 2011
An act to add Part 6.25 (commencing with Section 12694.1) to
Division 2 of the Insurance Code, relating to health care coverage,
and making an appropriation therefor.
LEGISLATIVE COUNSEL'S DIGEST
SB 703, as amended, Hernandez. Health care coverage: Basic Health
Program.
Existing law, the federal Patient Protection and Affordable Care
Act, requires each state to, by January 1, 2014, establish an
American Health Benefit Exchange that makes available qualified
health plans to qualified individuals and employers. Existing state
law establishes the California Health Benefit Exchange within state
government. The federal Patient Protection and Affordable Care Act
also authorizes the establishment of a basic health program under
which a state may enter into contracts to offer one or more standard
health plans providing a minimum level of essential benefits to
eligible individuals instead of offering those individuals coverage
through an Exchange, if specified criteria are met.
Existing law establishes the Managed Risk Medical Insurance Board
(MRMIB) and makes it responsible for administering the California
Major Risk Medical Insurance Program and the Healthy Families Program
to provide health care coverage to certain residents of the state
who are unable to secure adequate coverage, subject to specified
eligibility requirements.
This bill would establish in state government a Basic Health
Program, to be administered by MRMIB. The bill would require MRMIB to
enter into a contract with the United States Secretary of Health and
Human Services to implement the Basic Health Program, and would set
forth the powers and the duties of MRMIB relative to determining
eligibility for enrollment, setting premiums for coverage, and
selecting participating health plans under the Basic Health Program,
subject to requirements under federal law. The bill would require the
board to permit enrollment in the Basic Health Program on January 1,
2014. The bill would create the Basic Health Program Trust Fund for
those purposes and would make moneys in the fund subject to
appropriation by the Legislature, except that if the annual Budget
Act is not enacted by a certain date, the bill would authorize the
board to transfer specified funds from the trust fund to health plans
in order to comply with certain requirements, thereby making an
appropriation. The bill would require the Basic Health Program to be
funded by federal funds, private donations, premiums paid by eligible
individuals, and other non-General Fund moneys available for that
purpose. Notwithstanding those provisions, the bill would authorize
the board to obtain loans from the General Fund for initial start-up
expenses, to be repaid by July 1, 2016, and would establish a
procedure for continued coverage of individuals under the California
Health Benefit Exchange if costs of the Basic Health Program exceed
moneys available from specified sources. The bill would require
the board to request an evaluation of the Basic Health Program and to
seek funding for the evaluation from an unspecified independent
nonprofit private foundation.
Vote: majority. Appropriation: yes. Fiscal committee: yes.
State-mandated local program: no.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Part 6.25 (commencing with Section 12694.1) is added to
Division 2 of the Insurance Code, to read:
PART 6.25. BASIC HEALTH PROGRAM
12694.1. It is the intent of the Legislature to establish a Basic
Health Program option to implement the option contained in Section
1331 of the federal Patient Protection and Affordable Care Act
(PPACA). The Legislature finds and declares that Section 1331 of
PPACA creating the Basic Health Program does the following:
(a) Requires eligible individuals and their dependents enrolled in
the Basic Health Program be provided a health plan containing the
essential health benefits at a monthly premium price that does not
exceed the amount of the premium that the eligible individual would
have been required to pay if the individual had enrolled in the
applicable second lowest cost silver plan offered to the individual
through the California Health Benefit Exchange.
(b) (1) Prohibits the cost sharing an eligible individual is
required to pay under the Basic Health Program from exceeding the
cost sharing required under a platinum plan for individuals with a
household income at or below 150 percent of the federal poverty level
for the size of the family involved.
(2) Prohibits the cost sharing an eligible individual is required
to pay under the Basic Health Program from exceeding the cost sharing
required under a gold plan for an individual with a household income
above 150 percent of the federal poverty level but at or below 200
percent of the federal poverty level for the size of the family
involved.
(c) Requires the medical loss ratio for products in the Basic
Health Program to be 85 percent, instead of 80 percent, in the
individual and small group market.
12694.15. For purposes of this part, the following definitions
shall apply:
(a) "Basic Health Program" means the program authorized by Section
1331 of PPACA.
(b) "Board" means the Managed Risk Medical Insurance Board.
(c) "County organized health system" means a licensed health care
service plan established pursuant to Section 14087.51 or 14087.54 of
the Welfare and Institutions Code or Chapter 3 (commencing with
Section 101675) of Part 4 of Division 101 of the Health and Safety
Code.
(d) "Department" means the State Department of Health Care
Services.
(e) "Eligible individual" shall have the same meaning as set forth
in subdivision (e) of Section 1331 of PPACA.
(f) "Essential health benefits" shall have the same meaning as set
forth in Section 1302 of PPACA.
(g) "Fund" means the Basic Health Program Trust Fund established
by Section 12694.955.
(h) "Health plan" means a private health insurer holding a valid
outstanding certificate of authority from the Insurance Commissioner
or a health care service plan, as defined under subdivision (f) of
Section 1345 of the Health and Safety Code, licensed by the
Department of Managed Health Care.
(i) "Local initiative" means a licensed health care service plan
established pursuant to Section 14018.7, 14087.31, 14087.35,
14087.36, 14087.38, or 14087.96 of the Welfare and Institutions Code.
(j) "Patient Protection and Affordable Care Act" or "PPACA" means
Public Law 111-148, as amended by the federal Health Care and
Education Reconciliation Act of 2010 (Public Law 111-152), and any
amendments to, or regulations or guidance issued under, those acts.
12694.2. The Basic Health Program is hereby created and shall be
administered by the Managed Risk Medical Insurance Board.
12694.25. The board shall enter into a contract with the United
States Secretary of Health and Human Services to implement a Basic
Health Program to provide coverage to eligible individuals.
12694.26. The board shall permit enrollment in the Basic Health
Program on January 1, 2014.
12694.3. (a) The board shall administer the Basic Health Program
in conjunction with the Healthy Families Program, and shall provide
an eligibility and enrollment process that allows an individual, or
his or her natural or adoptive parent, legal guardian, caretaker
relative, foster parent, or stepparent with whom the child resides,
to enroll in the Basic Health Program at the same time an individual,
or his or her natural or adoptive parent, legal guardian, caretaker
relative, foster parent, or stepparent with whom the child resides,
applies for enrollment in the Healthy Families Program. An individual
may enroll in the same health plan, or a different health plan, than
his or her child or children who are enrolled in the Healthy
Families Program.
(b) In implementing the requirements of this section, and
consistent with the requirements of Section 1331 of PPACA, the board
may do all of the following:
(1) Determine eligibility criteria for the Basic Health Program.
(2) Determine the participation requirements of eligible
individuals applying for coverage in the Basic Health Program.
(3) Determine the participation requirements of participating
health plans.
(4) Determine when the coverage of eligible individuals begins and
the extent and scope of coverage.
(5) Determine, through negotiation with health plans, premium and
cost-sharing amounts.
(6) Collect premiums.
(7) Provide or make available subsidized coverage through
participating health plans.
(8) Provide for the processing of applications and the enrollment
of eligible individuals.
(9) Determine and approve the benefit designs and cost sharing
required by health plans participating in the Basic Health Program.
(10) Enter into contracts.
(11) Employ necessary staff.
(12) Authorize expenditures from the fund to pay program expenses
that exceed eligible individual premium contributions and to
administer the Basic Health Program, as necessary.
(13) Maintain enrollment and expenditures to ensure that
expenditures do not exceed amounts available in the fund, and, if
sufficient funds are not available to cover the estimated cost of
program expenditures, the board shall institute appropriate measures
to reduce costs.
(14) Issue rules and regulations, as necessary. Until January 1,
2016, any rules and regulations issued pursuant to this subdivision
may be adopted as emergency regulations in accordance with the
Administrative Procedure Act (Chapter 3.5 (commencing with Section
11340) of Part 1 of Division 3 of Title 2 of the Government Code).
The adoption of these regulations shall be deemed an emergency and
necessary for the immediate preservation of the public peace, health,
and safety or general welfare. The regulations shall become
effective immediately upon filing with the Secretary of State.
(15) Make application assistance payments to individuals who have
successfully completed the requirements of a Certified Application
Assistant in the Healthy Families Program and who successfully enroll
eligible individuals in Basic Health Program coverage.
(16) Exercise all powers reasonably necessary to carry out the
powers and responsibilities expressly granted or imposed by this part
and Section 1331 of PPACA.
12694.35. In implementing this part, eligibility for coverage
under, and the benefits, premiums, and cost sharing in, the Basic
Health Program, shall meet the requirements of Section 1331 of PPACA.
The board may determine the benefits, if any, to offer Basic Health
Program participants that are in addition to the essential health
benefits package required by Section 1302 of PPACA, including
benefits provided through specialized health care service plans, as
defined in subdivision (o) of Section 1345 of the Health and Safety
Code, and specialized health insurance policies, as defined in
Section 106, to the extent that PPACA authorizes the inclusion of
such plans or policies in the Basic Health Program. To the extent
authorized by federal law, the board shall determine whether benefits
provided through specialized health care service plans and
specialized health insurance policies are made available through the
Basic Health Program as part of a benefit package made available
through health plans , or as an additional product
to be purchased by individuals receiving coverage through the Basic
Health Program.
12694.4. The Basic Health Program shall be administered without
regard to gender, race, creed, color, sexual orientation, health
status, disability, or occupation.
12694.45. (a) The board shall use appropriate and efficient means
to notify eligible individuals of the availability of health
coverage from the Basic Health Program.
(b) The board, in conjunction with the department, shall conduct a
community outreach and education campaign to assist in notifying
eligible individuals of the availability of health coverage through
the Basic Health Program. The board and the department shall seek
federal funding and funding from private entities, including
foundation funding, for this purpose. The department and the
California Health Benefit Exchange shall include information on the
availability of coverage through the Basic Health Program in all
eligibility outreach efforts, and the board shall also include
information on the availability of coverage in the Medi-Cal program
and the California Health Benefit Exchange.
(c) The board shall use appropriate materials, which may include
brochures, pamphlets, fliers, posters, and other promotional items,
to notify families of the availability of coverage through the Basic
Health Program.
12694.5. (a) The board shall ensure that written enrollment
information issued or provided by the Basic Health Program is
available to program subscribers and applicants in each of the
Medi-Cal threshold languages.
(b) The board shall ensure that telephone services provided to
program subscribers and applicants by the Basic Health Program are
available in all of the languages identified as Medi-Cal threshold
languages.
(c) The board shall ensure that interpreter services are available
between eligible individuals and participating health plans in the
Medi-Cal threshold languages. The board shall ensure that subscribers
are provided information within provider network directories of
available linguistically diverse providers.
(d) The board shall ensure that participating health plans,
specialized health care service plans, and specialized health
insurance policies provide documentation on how they provide
linguistically and culturally appropriate services, including
marketing materials, to subscribers.
12694.55. No participating health plan, specialized health care
service plan, or specialized health insurance policy shall, in an
area served by the Basic Health Program, directly, or through an
employee, agent, or contractor, provide an applicant with any
marketing material relating to benefits or rates provided under the
Basic Health Program, unless the material has been reviewed and
approved by the board.
12694.57. The board may do the following:
(a) Amend existing Healthy Families Program contracts to allow the
parents of children enrolled in the Healthy Families Program to
enroll in the same plan as their child or children through the Basic
Health Program.
(b) Require, as a condition of participation in the Basic Health
Program, health plans to participate in the Healthy Families Program.
12694.6. (a) The board may establish geographic areas, consistent
with the geographic areas of the Healthy Families Program, within
which participating health plans may offer coverage to subscribers.
(b) Nothing in this section shall restrict a county organized
health system, a health plan, or a local initiative from providing
services to Basic Health Program subscribers in their licensed
geographic service area.
12694.65. (a) Notwithstanding any other provision of law, the
board shall not be subject to licensure or regulation by the
Department of Insurance or the Department of Managed Health Care.
(b) A participating health plan, specialized health care service
plan, or specialized health insurance policy that contracts with the
Basic Health Program and is regulated by the Insurance Commissioner
or the Department of Managed Health Care shall be licensed and in
good standing with its respective licensing agency. In its
application to the Basic Health Program, an applicant shall provide
assurance of its standing with the appropriate licensing agency.
12694.7. (a) The board shall contract with a broad range of
health plans in an area, if available, to ensure that subscribers
have a choice of health plans from among a reasonable number and
different types of competing health plans. The board shall develop
and make available objective criteria for health plan selection and
provide adequate notice of the application process to permit all
health plans a reasonable and fair opportunity to participate. The
criteria and application process shall allow participating health
plans to comply with their state and federal licensing and regulatory
obligations, except as otherwise provided in this part. Health plan
selection shall be based on the criteria developed by the board.
(b) (1) In its selection of participating health plans, the board
shall take all reasonable steps to ensure that the range of choices
of health plans available to each applicant shall include health
plans that include in their provider networks, and have signed
contracts with, traditional and public and private safety net
providers.
(2) A participating health plan shall annually submit to the board
a report summarizing its provider network. The report shall provide,
as available, information on the provider network as it relates to
all of the following:
(A) Geographic access for the subscribers.
(B) Linguistic services.
(C) The ethnic composition of providers.
(D) The number of subscribers who selected traditional and public
and private safety net providers.
(c) (1) The board shall not rely solely on a determination by the
Department of Managed Health Care or the Insurance Commissioner of a
health plan network's adequacy or geographic access to providers in
the awarding of contracts under this part. The board shall collect
and review demographic, census, and other data to provide to
prospective local initiatives, health plans, or specialized health
plans, and identify specific provider contracting target areas with
significant numbers of uninsured individuals with incomes that would
make them eligible for the Basic Health Program. The board shall give
priority to those health plans, on a county-by-county basis, that
demonstrate that they have included in their prospective plan
networks significant numbers of providers in these geographic areas.
(2) Targeted contracting areas are those ZIP Codes or groups of
ZIP Codes or census tracts or groups of census tracts that have a
percentage of eligible individuals that is greater than the overall
percentage of eligible individuals in that county.
(d) In each geographic area, the board shall designate a community
provider plan that is the participating health plan that has the
highest percentage of traditional and public and private safety net
providers in its network. Subscribers selecting such a health plan
shall be given a premium discount in an amount determined by the
board.
(e) This section shall also apply to a specialized health care
service plan, as defined in subdivision (o) of Section 1345 of the
Health and Safety Code, and a specialized health insurance policy, as
defined in Section 106, to the extent that the inclusion of that
plan or policy in the Basic Health Program is authorized by PPACA.
12694.75. (a) After two consecutive months of nonpayment of
premiums by an eligible individual enrolled in the Basic Health
Program, and a reasonable written notice period of not less than 30
days is provided to the eligible individual, the eligible individual
may be disenrolled from the Basic Health Program for the failure to
pay premiums. The board may conduct or contract for collection
actions to collect unpaid family contributions.
(b) Subject to any additional requirements of federal law,
disenrollments shall be effective at the end of the second
consecutive month of nonpayment.
12694.8. The Basic Health Program may place a lien on
compensation or benefits, recovered or recoverable by a subscriber or
applicant, or from any party or parties responsible for the
compensation or benefits for which benefits have been provided under
a plan contract or policy issued under this part.
12694.85. The board shall establish and use a competitive process
to select participating health plans and any other contractors under
this part. Any contract entered into pursuant to this part shall be
exempt from Chapter 2 (commencing with Section 10100) of Division 2
of the Public Contract Code, and shall be exempt from the review or
approval of any division of the Department of General Services.
12694.855. (a) A health care provider that is provided
documentation of an individual's enrollment in the Basic Health
Program shall not seek reimbursement or attempt to obtain payment for
any covered services provided to that individual other than from the
participating health plan covering that individual.
(b) Subdivision (a) shall not apply to any cost sharing required
for covered services provided to the individual under his or her
participating health plan.
(c) For purposes of this section, "health care provider" means any
professional person, organization, health facility, or any other
person or institution licensed by the state to deliver or furnish
health care services.
12694.9. To the extent permitted by federal law, an eligible
individual enrolled in the Basic Health Program shall continue to be
eligible for the program for a period of 12 months from the month
eligibility is established.
12694.95. The board shall do all of the following:
(a) Make use of a simple and easy to understand mail-in and
Internet application process.
(b) Permit individuals to learn, in a timely manner upon the
request of the individual, the amount of cost sharing, including, but
not limited to, deductibles, cost sharing, and coinsurance, under
the individual's health plan or coverage that the individual would be
responsible for paying with respect to the furnishing of a specific
product or service by a participating provider. At a minimum, this
information shall be made available to the individual through an
Internet Web site and through other means for individuals without
access to the Internet.
(c) Provide for the operation of a toll-free telephone hotline to
respond to requests for assistance.
(d) Maintain an Internet Web site through which eligible
individuals may obtain standardized comparative information on those
health plans.
(e) Utilize a standardized format for presenting health benefits
plan options offered through the Basic Health Program, including the
use of the uniform outline of coverage established under Section 2715
of the federal Public Health Service Act.
(f) Establish a process to inform individuals who lose eligibility
for under the Basic Health Program of
the availability of coverage through Medi-Cal and the California
Health Benefit Exchange, and to transmit their eligibility-related
information to those programs electronically to facilitate
enrollment.
12694.955. (a) The Basic Health Program Trust Fund is hereby
created in the State Treasury for the purpose of this part. All
federal funds received pursuant to Section 1331 of PPACA shall be
placed in the Basic Health Program Trust Fund. Moneys in the fund
shall be used for the purposes of this part, upon appropriation by
the Legislature, except that if the annual Budget Act is not enacted
by June 30 of any fiscal year preceding the fiscal year to which the
budget would apply, the board may transfer federal funds and premium
payments from the Basic Health Program Trust Fund to health plans
contracting with the board to ensure that individuals receiving
coverage through the Basic Health Program are able to comply with the
requirement to maintain minimum essential coverage as described in
Section 1501 of PPACA. Any moneys in the fund that are unexpended or
unencumbered at the end of a fiscal year may be carried forward to
the next succeeding fiscal year.
(b) Notwithstanding any other provision of law, moneys deposited
in the fund shall not be loaned to, or borrowed by, any other special
fund or the General Fund, a county general fund, or any other county
fund.
(c) The board shall establish and maintain a prudent reserve in
the fund.
(d) Notwithstanding Section 16305.7 of the Government Code, all
interest earned on the moneys that have been deposited into the fund
shall be retained in the fund and used for purposes consistent with
the fund.
(e) Subject to approval by the Department of Finance, and upon
notification to the committees of each house of the Legislature that
consider the budget and the committees of each house that consider
appropriations, the board may obtain loans from the General Fund for
all necessary and reasonable start-up and initial expenses related to
the administration of the fund and the Basic Health Program. The
board shall repay principal and interest, using the pooled money
investment account rate of interest, to the General Fund no later
than July 1, 2016.
12694.957. (a) The board shall ensure that the establishment,
operation, and administrative functions of the Basic Health Program
do not exceed the combination of federal funds, private donations,
premiums paid by eligible individuals, and other non-General Fund
moneys available for this purpose. Except for loans authorized
pursuant to subdivision (e) of Section 12694.955, no state General
Fund money shall be used for any purpose under this part.
(b) The board shall negotiate contracts with health plans to
provide or pay for benefits to enrollees under this part. Each
contract entered into pursuant to this part shall require the
participating health plan to assume full risk for the cost of care
for the contract period. The board shall not contract with any
participating health plan if such a contract would result in costs
exceeding the funds available for purposes of this part, as described
in subdivision (a). The requirements of this subdivision shall also
apply to contracts with specialized health care service plans, as
defined in subdivision (o) of Section 1345 of the Health and Safety
Code, and specialized health insurance policies, as defined in
Section 106, to the extent that the inclusion of such plans or
policies in the Basic Health Program is authorized by PPACA.
(c) In the event that the board reasonably expects that the cost
of the Basic Health Program will exceed the available funds specified
in subdivision (a), coverage for eligible individuals shall continue
until the annual redetermination of each eligible individual, after
which time the board shall immediately transfer the eligible
individual to coverage in the California Health Benefit Exchange. To
the extent permitted by federal law, the board shall contract with
the federal government to allow federal funds made available under
paragraph (3) of subdivision (d) of Section 1331 of PPACA, relating
to 95 percent of the premium tax credits under Section 36B of the
Internal Revenue Code of 1986, and the cost-sharing reduction under
Section 1402, to be used for the costs of the board in implementing
and administering this part.
12694.959. (a) The board shall request an evaluation of the Basic
Health Program. The board shall seek funding for the evaluation from
an independent nonprofit private foundation.
(b) The purpose of the evaluation is to determine the extent to
which the Basic Health Program has achieved objectives to provide
low-income Californians with equal or better benefit levels, and less
expensive premiums and lower cost sharing than would be available in
the California Health Benefit Exchange. In addition, the evaluation
is intended to assess the impact of the Basic Health Program on all
of the following:
(1) The viability of the California Health Benefit Exchange
(Exchange).
(2) Providers, health plans, and insurers that serve the Medi-Cal
program and the Healthy Families Program.
(3) Continuity of care and coverage for individuals moving from
the Medi-Cal program to the Basic Health Program and from the Basic
Health Program to the Exchange.
(c) Components of the evaluation may include, but are not limited
to, the following:
(1) A determination of the extent to which individuals served
through the Basic Health Program have lower premiums, additional
benefits, or lower cost sharing than they would otherwise have
received in the Exchange.
(2) A determination of the extent to which individuals served
through the Basic Health Program have a choice of quality health
coverage options and adequate provider access and networks.
(3) A determination of the extent to which Basic Health Program
administrators have been able to coordinate the contracting of health
plans and health insurance or the purchasing of other services with
the Medi-Cal program, Healthy Families Program, and the Exchange.
(4) A determination of the extent to which the Exchange is
attracting competitive health plan participation and offers premium
rate structures, and a determination as to the impact the inclusion
of the Basic Health Program population would have on the Exchange.
(d) The evaluation shall include, but is not limited to, all of
the following:
(1) Enrollment in the Exchange and enrollment in the Basic Health
Program, including actual enrollment as compared to the estimated
number of individuals eligible for the Exchange and the Basic Health
Program, the number of individuals enrolled in the Exchange with
family incomes between 300 percent and 400 percent of the federal
poverty level, and the number of individuals enrolled in the Exchange
with family incomes above 400 percent of the federal poverty level.
(2) The average cost per person of the individuals enrolled in the
Exchange as compared to the average cost per person of individuals
enrolled in the Basic Health Program.
(3) The impact of the Basic Health Program on the funding
available for Exchange administrative costs.
(4) The impact of the Basic Health Program on premiums in
the Exchange and the impact of the Exchange on premiums in the Basic
Health Program.
(5) The impact of the Basic Health Program on the Exchange's
ability to selectively contract with health plans.
(6) The average premium and average cost sharing per person
enrolled in the Basic Health Program and the Exchange.
(7) The number of plans participating in the Basic Health Program
and the Exchange, including whether and to what extent health plans
in the Medi-Cal program participate in the Basic Health Program in
counties with Medi-Cal managed care.
(8) The number of individuals enrolling in the Basic Health
Program who, in the month immediately preceding Basic Health Program
enrollment, were enrolled in the Medi-Cal program.
(9) The number of individuals enrolled in the Medi-Cal program
who, in the month immediately preceding Medi-Cal enrollment, were
enrolled in the Basic Health Program.
(10) The number of individuals enrolled in the Exchange who, in
the month immediately preceding Exchange enrollment, were enrolled in
the Basic Health Program.
(11) The number of individuals enrolled in the Basic Health
Program who, in the month immediately preceding enrollment in the
Basic Health Program, were enrolled in the Exchange.
(12) The average amount of federal funding received by the state
per person by year, broken down by federal funding for premiums and
federal funds for cost-sharing subsidies, for individuals enrolled in
the Basic Health Program.
(13) Whether implementation of the Basic Health Program has
resulted in diminished access to health care providers for Medi-Cal
beneficiaries or diminished provider participation in the Medi-Cal
program.
(e) The Legislature hereby requests the results of the evaluation
to be furnished to the appropriate policy and fiscal committees of
the Legislature by July 1, 2017.
(f) The California Health Benefit Exchange, the Basic Health
Program, the Medi-Cal program, and the Health Families Program shall
provide, in a timely manner, the data necessary for the evaluation
requested by this section.